The AUKUS Agreement: Current State, Speculation, and Challenges

The AUKUS agreement, a trilateral security partnership between Australia, the United Kingdom, and the United States, announced in September 2021, continues to shape strategic dynamics in the Indo-Pacific region. Designed to promote a "free and open Indo-Pacific" through enhanced defence cooperation, AUKUS is structured around two pillars: Pillar 1 focuses on Australia acquiring nuclear-powered attack submarines (SSNs), while Pillar 2 emphasizes collaborative development of advanced technologies such as artificial intelligence, quantum technologies, and hypersonic missiles. Recent developments, including speculation about the U.S. potentially withholding the transfer of Virginia-class submarines, the UK’s announcement in its Strategic Defence and Security Review (SDSR) to order up to 12 SSN-AUKUS submarines, and significant manufacturing challenges in the UK, have raised questions about the agreement’s trajectory. This article examines the current state of AUKUS, these specific developments, and their implications.

Overview of the AUKUS Agreement

AUKUS represented a significant shift in defence collaboration, with Pillar 1 aiming to equip Australia with conventionally armed, nuclear-powered submarines—a capability previously shared only between the U.S. and UK under their 1958 Mutual Defence Agreement. The plan, outlined in March 2023, follows a phased approach: starting in 2027, U.S. and UK SSNs will rotate through Australia to build local expertise; in the early 2030s, the U.S. intends to sell Australia three Virginia-class submarines, with the option for two more; and by the late 2030s and early 2040s, the UK and Australia will deploy SSN-AUKUS submarines, a new class incorporating British design and U.S. technology. Pillar 2, meanwhile, fosters innovation in areas critical to modern warfare, with potential expansion to include nations like Japan, Canada, and New Zealand.

The agreement has not been without controversy. China has criticised AUKUS as "irresponsible," arguing it fuels an arms race, while France expressed outrage over Australia’s cancellation of a $66 billion diesel submarine deal in favour of AUKUS. Despite these tensions, AUKUS partners have emphasized their commitment to nuclear non-proliferation, with Australia reaffirming it will not seek nuclear weapons and engaging transparently with the International Atomic Energy Agency (IAEA).

Speculation on U.S. Reluctance to Transfer Virginia-Class Submarines

Recent speculation, amplified in posts on X and media reports, suggests the U.S. may reconsider transferring Virginia-class submarines to Australia due to domestic production constraints. In June 2025, the U.S. Department of Defense launched a review of AUKUS, led by Under Secretary of Defense for Policy Elbridge Colby, who has previously questioned the strategic rationale of sharing "crown jewel" assets like SSNs when the U.S. Navy faces its own shortages. A Congressional Research Service report highlighted that U.S. shipyards are struggling to meet domestic demand, with only 31 Virginia-class submarines operationally ready in mid-2023 due to maintenance backlogs and slow production rates. The U.S. Navy aims to deliver two Virginia-class boats annually, with a third every second year, but

bottlenecks have raised doubts about the feasibility of transferring three to five submarines to Australia in the early 2030s.

This speculation has sparked concern in Australia, where the Virginia-class submarines are seen as a critical bridge to maintain undersea capabilities until the SSN-AUKUS fleet is operational. Critics, including Australian commentators on X, argue that AUKUS is "not on track" and "too costly," with fears that delays could leave the Royal Australian Navy (RAN) reliant on its aging Collins-class submarines beyond their planned retirement. The U.S. review, initially set for 30 days but expected to extend, aligns with the Trump administration’s "America First" agenda, raising the possibility of prioritising U.S. naval needs over AUKUS commitments. However, Australian and UK officials have downplayed these concerns, framing the review as a routine process for new administrations.

The August 2024 signing of a trilateral agreement on naval nuclear propulsion has bolstered confidence in AUKUS’s progress. This treaty, replacing an earlier information-sharing agreement, enables the transfer of nuclear material and equipment to Australia, subject to IAEA safeguards. Nonetheless, the treaty includes a clause allowing any party to terminate collaboration with one year’s notice, fuelling critics’ fears of U.S. withdrawal. Australian Greens and other opponents argue this flexibility undermines sovereignty and exposes Australia to risks of receiving high-level radioactive waste, despite government assurances to the contrary.

UK’s Commitment to 12 SSN-AUKUS Submarines

In June 2025, the UK Ministry of Defence announced plans to build up to 12 SSN-AUKUS submarines, a significant commitment outlined in the SDSR. This next-generation class, replacing the Astute-class, will incorporate U.S. propulsion systems and vertical launch systems (VLS) for land-attack missiles, enhancing interoperability with U.S. forces. The announcement reflects the UK’s ambition to modernise its submarine fleet and strengthen its role in AUKUS, with the first SSN-AUKUS expected to enter Royal Navy service in the late 2030s. The program is projected to support 30,000 jobs, 30,000 apprenticeships, and 14,000 graduate roles, underscoring its economic significance.

The UK has allocated substantial resources, including £4 billion in contracts to BAE Systems, Rolls-Royce, and Babcock for design and development through 2028, and a £9 billion, eight-year “Unity” contract with Rolls-Royce for nuclear reactor production. Australia’s £2.4 billion investment over ten years will expand Rolls-Royce’s Derby site, doubling its capacity to produce reactors for both nations’ submarines. These investments aim to address the UK’s industrial constraints and ensure delivery timelines are met.

Manufacturing Challenges in the UK

Despite this commitment, the UK faces significant manufacturing challenges. The Barrow-in-Furness shipyard, operated by BAE Systems, is already stretched by the Astute-class and Dreadnought-class programs, with the latter continuing into the 2030s. The addition of SSN-AUKUS construction, starting by 2030, strains capacity further. A UK Parliament report in 2023 noted that the Ministry of Defence’s 10-year Equipment Plan is £16.9 billion in deficit, raising questions about funding for AUKUS amid competing priorities. The UK’s reliance on foreign suppliers, such as French steel for Dreadnought pressure hulls, highlights gaps in domestic capabilities that could complicate SSN-AUKUS production. The only other UK

shipyard to build a nuclear-powered submarine was Cammell Laird in Birkenhead, which launched HMS Revenge in 1968 and HMS Conqueror in 1969, almost 60 years ago.

Rolls-Royce’s expanded Derby site requires a skilled workforce, and recruiting 1,170 additional personnel poses a challenge given the specialized nature of nuclear reactor manufacturing. The UK Infrastructure and Projects Authority has flagged the delivery of SSN-AUKUS reactors as “unachievable” without significant investment and workforce development. Concurrently, Australia’s contribution aims to alleviate supply chain stress, with opportunities for Australian firms to supply components like pressure hull steel and valves, leveraging existing industrial strengths.

Astute-Class Availability and SSN-AUKUS Impact on Royal Navy Fleet Size

The Royal Navy’s Astute-class submarines, currently numbering just five boats with one due to be commissioned in autumn 2025 and the final boat still under construction, face significant availability challenges that impact the transition to the SSN-AUKUS fleet. As of July 2025, only one Astute-class submarine is operational due to maintenance delays, crew shortages, and infrastructure limitations at HMNB Clyde and Devonport Royal Dockyard. A 2023 UK Parliament report highlighted that extended refit periods, exacerbated by supply chain issues and a lack of spare parts, have reduced the fleet’s readiness, with some boats sidelined for years. HMS Astute has just completed a 15-year first commission, the longest in RN submarine history and has now entered a £multi-million Mid Life Re-Validation Period (MLRP) in Devonport.

The Astute-class is expected to remain in service until the early 2040s, when the first SSN-AUKUS submarines enter Royal Navy service, with the goal of reaching a fleet of up to 12 boats by the 2050s. However, the SSN-AUKUS program will not immediately increase the number of operational submarines, as the first boats will replace retiring Astute-class submarines rather than expand the fleet. The Royal Navy anticipates maintaining a steady state of around seven to eight operational SSNs through the 2040s, with fleet growth to 12 boats likely occurring only in the late 2040s to 2050s, contingent on successful delivery and resolution of manufacturing bottlenecks at Barrow-in-Furness.

Strategic and Regional Implications

The AUKUS agreement remains a cornerstone of trilateral defence strategy, enhancing deterrence against perceived threats, particularly from China, in the Indo-Pacific. The Submarine Rotational Forces-West (SRF-West) initiative, set to begin in 2027, could double allied SSN presence in the Pacific by 2031, strengthening collective deterrence. However, delays or cancellations in submarine transfers could undermine Australia’s strategic posture, leaving it vulnerable during the transition from Collins-class to SSN-AUKUS submarines.

Pillar 2’s focus on advanced technologies continues to progress, with potential expansion to include Japan, though concerns about Japan’s information security systems have slowed negotiations. The UK’s investment in AI, quantum, and other technologies aligns with

AUKUS goals, but budgetary constraints and competing NATO commitments may limit its Indo-Pacific focus.

Conclusion

The AUKUS agreement is at a critical juncture. While the UK’s commitment to up to 12 SSN-AUKUS submarines and investments in industrial capacity signal robust support, manufacturing challenges and U.S. production constraints pose risks. Speculation about the U.S. withholding Virginia-class submarines underscores the fragility of the agreement’s timelines, particularly for Australia. As the trilateral partnership navigates these hurdles, transparent engagement with the IAEA and sustained political will across all three nations will be essential to realise AUKUS’s strategic vision. The coming years will test the resilience of this ambitious alliance in delivering both submarines and advanced capabilities to secure the Indo-Pacific.